GOLD PRICES jumped almost $25 in 15 minutes on Friday after new US jobs data said non-farm payrolls grew much less in September than analysts forecast.
Western stock markets slashed earlier strong gains but US Treasury bonds leapt, driving the yield on 10-year debt down to 1.95% – the lowest level since April.
Adding 142,000 for last month, the US government's non-farm payrolls estimate badly missed consensus predictions of 203,000 with the second lowest addition in 18 months.
The US Dollar dropped over a cent against the Euro on the FX market following the news, while gold rose 1.9% to $1134 per ounce – recovering two-thirds of the week's earlier losses.
Silver rose twice as fast to reclaim all but 10 cents of this week's drop and edging just above $15 per ounce – a new 6-year low when broken decisively this summer.
“I expect that we'll reach our maximum employment mandate in the near future and inflation will gradually move back to our 2% goal,” said San Francisco Federal Reserve Bank president John Williams – known as a 'centrist' rather than a 'dove' or 'hawk' on raising rates –
in a speech Thursday.
“In that context, it will make sense to gradually move away from the extraordinary stimulus that got us here.”
US consumer price inflation was last seen at 0.2% per year on August's official data.
With two Fed meetings now left before 2016, Williams yesterday repeated earlier comments that he expects the Fed will vote to raise rates after 7 years at 0% “sometime later this year.”
“The prospect that the turn in the US monetary cycle is still imminent,” says a new note from precious metals analyst Robin Bhar at French investment bank and bullion market maker Societe Generale, “remains central to our view that we remain bearish for the yellow metal.”
“Our view is still that the Fed will hike in December,” says FX strategist Steven Barrow at investment and bullion bank ICBC Standard Bank.
“[But] if economic data, like payrolls, start to peel back, perhaps in response to weaker export orders, the Fed might be forced into believing its rhetoric from September, that overseas factors should stall lift-off.”
Ahead of Friday's weak US jobs data, Dollar gold prices had been on track for their sharpest weekly in almost 7 months according to Bloomberg data.
“A strong print,” the Wall Street Journal this morning quoted Swiss bank and bullion market maker UBS's precious metals analysts, “holds downside potential for gold.
“The risk [was] that there may be limited immediate support as participants in India are out today for a public holiday while participants in China have been out from yesterday for the Golden Week.”
